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NOMINATION FACILITY IN
BANK ACCOUNT
(RBI/2014-15/72 Dated July 1, 2014)
BANK PO
EXAM
JAIIB
EXAM
BANK
PROMOTION
INTRODUCTION
Banking Companies (Nomination) Rules 1985 permits
banks to pay dues to nominees in the event of death
of depositor(s) without asking for succession
certificate or verifying claims of legal heirs.
Nomination facility was introduced on 29th March
1985 in the Banking Regulations Act, 1949 Sec 45-
ZA to 45-ZF.
Nomination are available for:
1) Deposit Accounts
2) Safe Custody Accounts and
3) Safe Deposit vault accounts
Particulars
Acceptance of
Nomination
Pay/Deliver only
to nominees
Deposits Section 45 ZA Section 45 ZB
Safe Custody Section 45 ZC Section 45 ZD
Safe Deposit
Lockers
Section 45 ZE Section 45 ZF
NOMINATION IS MENTION IN
FOLLOWING SECTION OF BANKING
REGULATION ACT 1949
WHO CAN BE A NOMINEE?
The nomination to be made in favour of only
individual not in favour of Trust, Society etc.
Nomination can be made in favour of one person
only. It can be made in existing or new accounts
and can be cancelled or changed subsequently by
the depositors.
Government Deposit Schemes allow more than
one nominees in their accounts. Such as PPF,
Sukanya Samridhi Scheme, Senior Citizen Saving
Scheme, PF, Gratuity etc.
Type of Account Nature of Account Number of Nominee(s)
Deposits Single/Joint One only
Safe Custody only Single One Only
Safe Deposit Lockers only Single One Only
Safe Deposit Lockers Joint – E/S One only
Safe Deposit Lockers Joint – F/S One only
Safe Deposit Lockers Joint – Jointly
Operations
Each can nominate one
(As per IBA max. 2)
More than one nominee facility is available in Government deposit
scheme. As per Banking Regulation Act, single nomination facility is
available in bank except in one case of Safe Deposit Lockers.
NUMBER OF NOMINEES IN BANK
Account Registration Cancellation Variation
DEPOSITS DA 1 DA 2 DA 3
SAFE CUSTODY SC 1 SC 2 SC 3
SAFE
DEPOSIT
LOCKER
SL 1
or SL 1A
(JOINT A/C)
SL 2 SL 3
NOMINATION FORM
BENEFITS OF NOMINATION
Nomination facilitates faster and easier release of
funds/articles without insistence on Succession
Certificate /Probate of Will.
Nomination facility is available to accountholders
operating current accounts, savings bank
accounts and all types of term deposit accounts,
safe deposit lockers and safe custody of articles.
Nomination facility is intended for individuals and
sole proprietary concerns.
SALIENT FEATURES OF NOMINATION
Nomination cannot be made in accounts where deposits are
held in a representative capacity e.g. Trust Accounts and in
accounts of Partnership Firms, HUF, Companies, Associations,
Clubs etc.
In case of a joint account of individuals, nomination should be
made by all depositors jointly.
A non - resident can be nominated as a nominee in a resident
account. In case of non-resident nominees, the amount
entitled to him from the account(s)/deposit(s) of a deceased
person, will be credited to his NRO account.
Banks should note that the facility of nomination is not
available in case of deposit of safe custody articles by more
than one person.
SALIENT FEATURES OF NOMINATION
Minor can not make a nomination in self operated minor
accounts. Guardian can make nomination on behalf of
minor.
In case of guardian operated minor's account,
nomination can made by guardian.
Nomination favouring the minor is permitted on the
condition that the accountholder, while making the
nomination, appoints another individual, not being a
minor, to receive the amount of the deposit on behalf of
the nominee in the event of the death of the depositor
during the minority of the nominee.
NOMINATION IN PENSION ACCOUNT
Nomination facility is available for savings bank
accounts opened for credit of pension.
However, Banking Companies (Nomination) Rules,1985
are distinct from the Arrears of Pension (Nomination)
Rules,1983 and the nomination exercised by the
pensioner under the latter rules for receipt of arrears of
pension will not be valid for the purpose of deposit
accounts held by the pensioners with banks, for which a
separate nomination is necessary in terms of the
Banking Companies (Nomination) Rules, 1985 in case a
pensioner desires to avail of nomination facility.
NOTING OF NOMINATION ON FDR / PASS BOOK
A nomination will continue to be in force
even on renewal of term deposit, unless
specifically cancelled or changed.
Notation that 'Nomination registered on
________' will be made in FDR/Pass
Book/Statement on registering the
Nomination. (Name of nominee will not be
mentioned except when it is specifically
requested by customer).
WITNESS & ACKNOWLEDGEMENT
Nomination is compulsory in all single named accounts.
Where the account holder is not willing to
nominate, he/she is to give his/her refusal in writing.
The nomination forms prescribe that thumb impression of the
account holder is required to be attested by two witnesses.
 RBI has clarified that signature need not be attested.
The banking company shall acknowledge in writing, to the
concerned depositor or depositors, the filing of the relevant duly
completed Form of nomination or cancellation of nomination or
variation of nomination, as the case may be, in respect of a deposit.
STATUS & RIGHT OF NOMINEE
The nominee is treated as a Trustee for Legal
Heirs for receiving the money or articles after
death.
He is not owner. He does not acquire right of a
depositor. He can’t operate the account.
Bank obligation to make payment to nominee (no
one else), except as per court order.
On payment to nominee, bank is discharged
from liability.
NOMINATION FACILITY IN BANK ACCOUNTS

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NOMINATION FACILITY IN BANK ACCOUNTS

  • 1. NOMINATION FACILITY IN BANK ACCOUNT (RBI/2014-15/72 Dated July 1, 2014) BANK PO EXAM JAIIB EXAM BANK PROMOTION
  • 2. INTRODUCTION Banking Companies (Nomination) Rules 1985 permits banks to pay dues to nominees in the event of death of depositor(s) without asking for succession certificate or verifying claims of legal heirs. Nomination facility was introduced on 29th March 1985 in the Banking Regulations Act, 1949 Sec 45- ZA to 45-ZF. Nomination are available for: 1) Deposit Accounts 2) Safe Custody Accounts and 3) Safe Deposit vault accounts
  • 3. Particulars Acceptance of Nomination Pay/Deliver only to nominees Deposits Section 45 ZA Section 45 ZB Safe Custody Section 45 ZC Section 45 ZD Safe Deposit Lockers Section 45 ZE Section 45 ZF NOMINATION IS MENTION IN FOLLOWING SECTION OF BANKING REGULATION ACT 1949
  • 4. WHO CAN BE A NOMINEE? The nomination to be made in favour of only individual not in favour of Trust, Society etc. Nomination can be made in favour of one person only. It can be made in existing or new accounts and can be cancelled or changed subsequently by the depositors. Government Deposit Schemes allow more than one nominees in their accounts. Such as PPF, Sukanya Samridhi Scheme, Senior Citizen Saving Scheme, PF, Gratuity etc.
  • 5. Type of Account Nature of Account Number of Nominee(s) Deposits Single/Joint One only Safe Custody only Single One Only Safe Deposit Lockers only Single One Only Safe Deposit Lockers Joint – E/S One only Safe Deposit Lockers Joint – F/S One only Safe Deposit Lockers Joint – Jointly Operations Each can nominate one (As per IBA max. 2) More than one nominee facility is available in Government deposit scheme. As per Banking Regulation Act, single nomination facility is available in bank except in one case of Safe Deposit Lockers. NUMBER OF NOMINEES IN BANK
  • 6. Account Registration Cancellation Variation DEPOSITS DA 1 DA 2 DA 3 SAFE CUSTODY SC 1 SC 2 SC 3 SAFE DEPOSIT LOCKER SL 1 or SL 1A (JOINT A/C) SL 2 SL 3 NOMINATION FORM
  • 7. BENEFITS OF NOMINATION Nomination facilitates faster and easier release of funds/articles without insistence on Succession Certificate /Probate of Will. Nomination facility is available to accountholders operating current accounts, savings bank accounts and all types of term deposit accounts, safe deposit lockers and safe custody of articles. Nomination facility is intended for individuals and sole proprietary concerns.
  • 8. SALIENT FEATURES OF NOMINATION Nomination cannot be made in accounts where deposits are held in a representative capacity e.g. Trust Accounts and in accounts of Partnership Firms, HUF, Companies, Associations, Clubs etc. In case of a joint account of individuals, nomination should be made by all depositors jointly. A non - resident can be nominated as a nominee in a resident account. In case of non-resident nominees, the amount entitled to him from the account(s)/deposit(s) of a deceased person, will be credited to his NRO account. Banks should note that the facility of nomination is not available in case of deposit of safe custody articles by more than one person.
  • 9. SALIENT FEATURES OF NOMINATION Minor can not make a nomination in self operated minor accounts. Guardian can make nomination on behalf of minor. In case of guardian operated minor's account, nomination can made by guardian. Nomination favouring the minor is permitted on the condition that the accountholder, while making the nomination, appoints another individual, not being a minor, to receive the amount of the deposit on behalf of the nominee in the event of the death of the depositor during the minority of the nominee.
  • 10. NOMINATION IN PENSION ACCOUNT Nomination facility is available for savings bank accounts opened for credit of pension. However, Banking Companies (Nomination) Rules,1985 are distinct from the Arrears of Pension (Nomination) Rules,1983 and the nomination exercised by the pensioner under the latter rules for receipt of arrears of pension will not be valid for the purpose of deposit accounts held by the pensioners with banks, for which a separate nomination is necessary in terms of the Banking Companies (Nomination) Rules, 1985 in case a pensioner desires to avail of nomination facility.
  • 11. NOTING OF NOMINATION ON FDR / PASS BOOK A nomination will continue to be in force even on renewal of term deposit, unless specifically cancelled or changed. Notation that 'Nomination registered on ________' will be made in FDR/Pass Book/Statement on registering the Nomination. (Name of nominee will not be mentioned except when it is specifically requested by customer).
  • 12. WITNESS & ACKNOWLEDGEMENT Nomination is compulsory in all single named accounts. Where the account holder is not willing to nominate, he/she is to give his/her refusal in writing. The nomination forms prescribe that thumb impression of the account holder is required to be attested by two witnesses.  RBI has clarified that signature need not be attested. The banking company shall acknowledge in writing, to the concerned depositor or depositors, the filing of the relevant duly completed Form of nomination or cancellation of nomination or variation of nomination, as the case may be, in respect of a deposit.
  • 13. STATUS & RIGHT OF NOMINEE The nominee is treated as a Trustee for Legal Heirs for receiving the money or articles after death. He is not owner. He does not acquire right of a depositor. He can’t operate the account. Bank obligation to make payment to nominee (no one else), except as per court order. On payment to nominee, bank is discharged from liability.